Some good news emerged for home improvement stock Home Depot (HD), as the sheer size of its market share emerged. The company holds around 28% of the home improvement market by itself, noted one study, and that makes Home Depot a serious force to be reckoned with. Investors proved satisfied with this revelation, and sent Home Depot shares up modestly in Wednesday afternoon’s trading.
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A report from the Numerator Home Improvement Tracker—which focuses on “…omnichannel consumer buying behavior in select home improvement categories”—revealed just how deep Home Depot is into the home improvement market. The tracker also revealed that its next closest competitor, Lowe’s (LOW), is not especially close at all. Lowe’s accounts for about 18% of consumer spend in that sector.
The tracker also revealed some other key points about the home improvement market. For instance, most shoppers will shop for home improvement goods based on convenience. Fully 44.2% of customers responded that convenience of location was the key reason for shopping where they do. Meanwhile, price was a close second with 41.5%, and 34.1% noted product options were a big cause. And private label items have their place in consumer spend; name brands lead the way in most cases, but hand tools are a big private label draw with 39.2% of customer spending.
Would You Like to Return That Item?
Home Depot also made a pretty big change to its return policy that may be a bit of a problem for its customers. Now, there are several items that have extremely narrow return windows: major appliances have just a 48-hour window for return, and start with the Customer Solutions team instead of a simple return to the store.
Further, a slate of items, ranging from generators to pressure washers to dehumidifiers and air conditioners have just a seven-day return policy on them. Some outside observers are calling this a serious opportunity for less-restrictive policies at competing stores, particularly Amazon (AMZN).
Is Home Depot a Good Long-Term Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on HD stock based on 17 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 5.91% rally in its share price over the past year, the average HD price target of $428.12 per share implies 14.2% upside potential.
